Managers are often the first people who see the need for a new or better ERP system. They field inquiries from customers, complaints from staff members and demands from the executive level — all of which, seemingly, would be easier to mitigate or manage with a well-functioning ERP system. But selling change (especially change as expensive as ERP can be), takes both finesse and hard numbers. If you’re quickly coming to the realization that your organization might benefit from a new or enhanced ERP system, it’s time to put pencil to paper and start generating figures and ERP success strategies to convince upper management of your idea. Here are some good places to start:
1. Return on Investment. Executives need to see when, how and where the ERP system will start paying dividends. Begin by collecting data on the actual costs of time-consuming workarounds (e.g., one FT employee spending x hours/week hand-counting inventory at $x cost) and showing how the system will increase efficiency and free up staff to generate returns via other initiatives.
2. Measurement Tools. People can be (rightfully) nervous about bloated ERP projects that suck time, energy and money and never meet expectations. (Check out our 2012 ERP Report for some compelling statistics about budget and duration overages.) Show that a new ERP system will have quantifiable results by identifying and describing key performance indicators of the project. Determine how success will be monitored throughout the implementation and beyond.
3. Standardization Strategy. One of the great benefits of an ERP system can be realized via standardization across business units. Identify departments wherein standardization could be most easily achieved (human resources, accounting, customer service, etc.) as well as those that might be a bit trickier, and develop a strategy to blueprint processes in each of them. Independent third-party consultants like Panorama are highly beneficial in this regard as we sort through “as is” processes to build the “to be” processes needed for enhanced business benefit and ERP system utilization. Documenting and mapping processes is also a must prior to any software selection activities, so get cracking.
4. Organizational Change Components. Investigate and document previous training and organizational change management initiatives conducted by your company. What worked? What didn’t? What do end-users need to increase usability? Create channels of communication with end-users to start achieving buy-in and determining organizational change strategies from the beginning. Document what they say and communicate it to the executive level.
5. Total Cost of Ownership. As Eric Kimberling pointed out in last week’s blog post, ERP Software Licensing: Common Gotchas to Look Out For, “Executives should have a clear picture of the total cost of ownership (TCO) for their purchases – not just their direct software license costs – and this understanding should be applied to negotiate contract terms accordingly. In addition, the TCO should be quantified for at least seven years . . .” Executives don’t like surprises. Work with a third-party consultant to determine the true TCO (including licensing, resources, integration and customization) for a 7 – 10 year period.
Analyzing and documenting the improvements, savings and benefits made possible by an ERP system is no easy task — but one which will likely reap great rewards if done correctly. The first step to any of this is to educate yourself. If you’re reading this blog, it’s clear that you’ve already begun. This site holds a wealth of free information and independent research about every aspect of an ERP implementation, and is an excellent resource for your strategy-building activities. If you have any questions about our services, or would like advice for your specific scenario, please do not hesitate to contact us or schedule an hourly ERP consultation.